The Oreo has long been the top selling cookie in the U.S. market. But Kraft Food

Question

The Oreo has long been the top selling cookie in the U.S. market. But Kraft Foods Inc. had to reinvent the Oreo to make it sell well in China given that the Chinese were not big cookie eaters. Kraft learned that traditional Oreo were too sweet for Chinese tastes and that the packages of 14 Oreos priced at 72 cents were too expensive. The company developed 20 prototypes of reduced-sugar Oreos. Kraft also notice China's growing thirst for milk and began a grassroots marketing campaign to educate Chinese consumers about the American tradition of pairing milk with cookies. The company created an Oreo apprentice program at 30 Chinese universities that 6,000 applicants (Based on: Julie Jargon, "Kraft Reformulates Oreo, Scores in China," Wall Street Journal, May 1, 2008.)

Explanation / Answer

The company developed 20 prototypes of reduced-sugar Oreos and tested them with Chinese consumers before arriving at a formula that tasted right. Kraft also introduced packages containing fewer Oreos for just 29 cents.

Some Chinese consumers still find the Oreos too sweet. One 30-year-old consumer who was shopping for groceries in the eastern part of Beijing recently, said that he likes the cookie but that "many of my friends think I am a bit weird to stick to Oreo cookies, as most of them think it too sweet to be accepted."

Mr. Warren also noticed China's growing thirst for milk, which Kraft wasn't fully exploiting. In fact, increased milk demand in China and other developing markets -- as well as tighter supplies resulting from recent droughts in milk-producing countries and a reduction of subsidies for European dairy farmers -- has pushed up milk prices around the world. That has put pressure on food manufacturers like Kraft, whose biggest business is cheese, but it has also created opportunity.

In China, Kraft began a grassroots marketing campaign to educate Chinese consumers about the American tradition of pairing milk with cookies. The company created an Oreo apprentice program at 30 Chinese universities that drew 6,000 student applications.

Three hundred of the applicants were trained to become Oreo brand ambassadors. Some of the students rode around Beijing on bicycles outfitted with wheel covers resembling Oreos and handed out cookies to more than 300,000 consumers. Others held Oreo-themed basketball games to reinforce the idea of dunking cookies in milk. Television commercials showed kids twisting apart Oreo cookies, licking the cream center and dipping the chocolate cookie halves into glasses of milk.


Ms. Rosenfeld calls the bicycle campaign "a stroke of genius that only could have come from local managers. The more opportunity our local managers have to deal with local conditions will be a source of competitive advantage for us."

Still, Kraft realized it needed to do more than just tweak its recipe to capture a bigger share of the Chinese biscuit market. China's cookie-wafer segment was growing faster than traditional biscuit-like cookies, and Kraft was trailing rival Nestlé SA, the world's largest food company by revenue, which had introduced chocolate-covered wafers there in 1998.

So in China in 2006 Kraft remade the Oreo itself, introducing for the first time an Oreo that looked almost nothing like the original. The new Chinese Oreo consisted of four layers of crispy wafer filled with vanilla and chocolate cream, coated in chocolate. Kraft developed a proprietary handling process to ensure that the chocolate product could be shipped across the country, withstanding the cold climate in the north and the hot, humid weather in the south, yet still be ready to melt in the mouth.

Tailoring Western brands to Eastern tastes isn't a new idea, but it has proved more difficult for some companies than others. When Campbell Soup Co. CPB +0.77% tried to enter China in the early 1990s, it sold the same ready-to-eat soups found in American grocery stores and they flopped. Now, Campbell is trying to crack the Chinese soup market again with flavorful broths it hopes will fit with the Chinese tradition of making soup from scratch.

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